TY  - JOUR
AU  - Desmet,Klaus
AU  - Rossi-Hansberg,Esteban
TI  - Spatial Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15349
PY  - 2009
Y2  - September 2009
UR  - http://www.nber.org/papers/w15349
L1  - http://www.nber.org/papers/w15349.pdf
N1  - Author contact info:
Klaus Desmet
Department of Economics
Universidad Carlos III
28903 Getafe (Madrid)
SPAIN
E-Mail: klaus.desmet@uc3m.es

Esteban Rossi-Hansberg
Princeton University
Department of Economics
Fisher Hall
Princeton, NJ 08544-1021
Tel: 609/2584024
Fax: 650/725-5702
E-Mail: erossi@princeton.edu
AB  - We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially across locations. The result is a spatial endogenous growth theory that can shed light on the link between the evolution of economic activity over time and space. We apply the model to study the evolution of the U.S. economy in the last few decades and find that the model can generate the reduction in the employment share in manufacturing, the increase in service productivity starting in the second part of the 1990s, the increase in the value and dispersion of land rents in the same period, as well as several other spatial and temporal patterns.
ER  -